COVID-19: Support for businesses that pay business rates

Support for businesses that pay business rates

We will introduce a business rates retail holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.

Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Guidance for local authorities on the business rates holiday will be published by 20 March

Support for businesses that pay little or no business rates

The government will provide additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR). This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs.

If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority – you do not need to apply.

Funding for the scheme will be provided to local authorities by government in early April. Guidance for local authorities on the scheme will be provided shortly.

GOV.UK Guidance
COVID-19: support for businesses that pay rates

Guidance has been updated – Version 3 published with updates on State Aid, monitoring and reporting requirements, new annexes on state aid, Spotlight, and post payment checks, clarification of eligibility of charities.

In addition Annex E now gives guidance to local authorities in respect of the information that they may need to collect from businesses in order to make payment of the grant. 

GOV.UK Guidance
COVID-19: guidance on business support grant fundin
g

Some councils have already begun to request this information or have included a downloadable form on their website to collate this information

This includes the City of York Council and Hambleton District Council

A bit more info from CGA

CGA have been in touch with both Selby District Council and City of York Council on a daily basis to ask various questions in respect of the above, including clarification in respect of qualifying businesses, we are currently working through our database to categorise clients.

Around 700,000 businesses in England currently eligible for Small Business Rate Relief (SBBR) or Rural Rate Relief can apply for the emergency funding.

The Department for Business, Energy & Industrial Strategy will be writing to local authorities this week to outline the scheme, and encourage local authorities to prepare.

However, once up-and-running, your local authority will contact you rather than having to apply yourself.

And funding will not be available until April, as stated on the government website.

This additional funding for local authorities who collect business rates is part of a package of fiscal measures to help small business survive the coronavirus pandemic.

The coronavirus grant only applies to small business in England. Business rates in Scotland, Wales and Northern Ireland are set by their devolved administrations.

Finally, it is definitely worth checking that your business is correctly rated, having discussed the new retail discounts with one particular client, who didn’t think they qualified as being within the retail sector, we were able to advise to contrary and not only will they now benefit from the discounts for 20/21 but they should also receive a refund for the current year – this is worth approx. £26,000

Relevant Links

GOV.UK Guidance COVID-19: Support for businesses that pay rates
GOV.UK Guidance COVID-19: Support for businesses that pay little or no business rates
GOV.UK Coronavirus (COVID-19): Guidance on business support grant funding

Selby District Council – Business Rates
Selby District Council Expanded Retail Discount
City of York Council – Business Rates
Harrogate District Council – Business Rates
Hambleton District Council – Business Rates
Ryedale District Council – Business Rates

COVID-19: Support for businesses paying tax

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.

GOV.UK Guidance
COVID-19: Support for businesses paying tax

Coronavirus VAT deferment: Get the details right

Many UK businesses are at risk of losing out on the coronavirus three month VAT deferment if they do not act immediately.

After announcing the easement on 20 March, HMRC followed up with a Q&A warning direct debit payers that they must contact their banks to cancel the facility or the VAT will automatically be withdrawn in the next few days.

Other details remain confusing, including repayment dates and payments on account. Taxpayers who use mini one-stop shop returns (MOSS) are not included in the scheme.

£30bn VAT payments suspended till 30 June 2020

On 20 March, the new Chancellor, Rishi Sunak, announced a three month VAT payment deferment lasting until 30 June 2020. This amounts to a £30bn credit line for over two million businesses. The tax holiday will be automatic – see direct debit payer risk below – although businesses may still go ahead and pay now if they wish. Taxpayers do not have to notify HMRC if they intend to take advantage of the payment holiday.

Any VAT due will be payable by the end of the 2020/21 financial year, which is 31 March 2021. This is the date for monthly VAT payers. However, the position is more complex for most VAT-registered businesses that are on quarterly staggers.

HMRC has yet to confirm their position. But the likely payments dates will be, depending on return due dates: 31 March 2021; 30 April 2021; or 31 May 2020.

There will be no interest or default surcharges due on deferred VAT. VAT credits and refund will be paid as normal during the period.

VAT returns still due; MTD phase 2 kicks in

Importantly, VAT returns must still go in on time by the 7th of the relevant month.

As HMRC has not postponed the launch of the new Making Tax Digital for VAT phase two, so all businesses above the VAT registration threshold are obliged to introduce digital bookkeeping and the full digital journey.

The latter means no manual adjustments to data, consolidating in spreadsheets, or using ‘cut and paste’. The regular VAT penalty regime for missing any MTD obligations also comes into play on 1 April 2020 when the one-year soft-landing phase of MTD ends.

Direct debit payers at risk

One major glitch in the plan is taxpayers on direct debit. HMRC will automatically withdraw the VAT declared in the VAT return. They cannot stop this process. So any direct debit payer must contact their bank immediately to cancel the payment.

Mixed messages for some VAT payers

After initial confusion, foreign businesses with a UK VAT registration have been confirmed as eligible for the VAT deferral. However, any businesses filing for B2C electronic services sales have been excluded. They will have to pay the VAT due as normal. There are no details yet on payment-on-account payers. But we assume there will be a postponement, too?

What happens after June?

Given the deepening economic gravity of the COVID-19 situation, it is entirely possible that there will be an extension in July to this VAT deferment. So direct debit payers should pause before reinstating their payments. And we should all keep tuned.

COVID-19: A Checklist for Businesses Affected by COVID-19

A Checklist for Businesses Affected by COVID-19 – key actions to take and contingency plans to make

These urgent actions apply to businesses and companies regardless of size.

This is the guidance we are giving to the many businesses we are advising, many of whom are now working from home and wondering where to start.

Last week’s announcement from the Chancellor set out a raft of measures to assist businesses which could make a vast difference to many businesses. Some of the detail which will enable you to access these packages is still to follow. There are, however, a number of actions that businesses can undertake to prepare for speedy applications and to prioritise what is most time-critical.

As you would expect, banks and HMRC are being very supportive of the businesses we are advising through these very challenging times.  There are two key points that may influence the checklist below:

  • A ‘Business Plan’ for recovery and repayment will put you on the front foot – you should be ready to talk through this plan with lenders and creditors
  • Be mindful of any director, personal or family member guarantees that already exist for loans. New guarantees may be required for any government-backed loan schemes

You should be considering the following:

  • Coronavirus job retention scheme for those businesses who have concerns around staff
  • Remote working/Early Holidays/Short Time Working/Sick pay/SSP/Travel Policies/Health and Safety Policies/Redundancies
  • Maintain an open dialogue with Customers, Suppliers, Contractors and Trading Partners
  • Time to Pay: Defer VAT/PAYE/NIC/CIS/MGD payments for pre-agreed periods
  • Defer Rates Payments where you are able to
  • Where applicable, claim new business rates reliefs
  • Maintain an open dialogue with landlords – agree Rent
  • Prepare updated Bank Facilities including Capital Holidays
  • Coronavirus Business Interruption Loan Scheme – with effect 23rd March. These are loans, not grants – a business plan which details your ability to repay this will be essential.
  • Defer Capital Expenditure
  • Apply for a reprieve on finance repayments in respect of Hire Purchases of Leasing – three to six months or more if you can
  • Improve and accelerate Income
    • Credit Control is of tantamount importance
    • Reduce the amount of stock you carry
    • Review your insurance policies
    • Review your contracts and advance orders
    • Review your routes to market
    • Review and where possible revise you T&C’s

There are many practical steps which businesses will be able to take either themselves or with their professional advisers.

CGA can be contacted at any time for advice and support.


UPDATED (31/03/2020) for the announcement made by Alok Sharma 28/03/2020 – information provided by Redman Nichols Butler

On Saturday, 28 March 2020 at the No 10, Downing Street daily Covid – 19 Health Crisis media briefing, Alok Sharma, Secretary of State for Business, Energy and Industrial Strategy, announced that the Government will bring into law in “the coming weeks” changes to the UK insolvency laws to help struggling British businesses stay afloat and give them “greater flexibility” during the coronavirus pandemic and emerge intact the other side of it.

He said that the measures will give firms extra time and space to weather the storm and be ready to get back to normal when the crisis ends whilst ensuring creditors get the best return possible in the circumstances.  He also said that that the changes will allow companies undergoing restructuring to continue access to supplies and raw materials to carry out their activities.

Mr Sharma also announced that there would be a temporary suspension of the wrongful trading provisions “for three months” to be applied retrospectively from March 1 2020 for company directors to remove the threat of personal liability during the pandemic, but he was keen to emphasise that all of the other checks and balances that help to ensure directors fulfil their duties properly will remain in force.

The Insolvency Service have, over the weekend, issued further information on the Government’s proposed changes.  They include:-

  • A moratorium for companies giving them breathing space from creditors enforcing their debts for a period of time whilst they seek a rescue or restructure.
  • Protection of their supplies to enable them to continue trading during the moratorium.
  • A new restructuring plan or procedure, binding creditors to that plan.

As soon as we have more information, we shall let you know.  

Redman Nichols Butler

www.redmannicholsbutler.co.uk

[DOWNLOAD] COVID-19: Self-employment Income Support Scheme

The major update yesterday was with regard to Support for self-employed through the Self-employment Income Support Scheme.

We are already working through the numbers for our clients, however it must be noted that there are a considerable number of non-qualifiers and many small limited companies, working from home and with no staff are as yet to receive much by the way of financial assistance.

The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).

This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).

GOV.UK Guidance
COVID-19: Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme

DOWNLOAD full CGA Factsheet on Self Employment Income Support Scheme (last updated 30/03/20) HERE

The long-awaited statement from the Chancellor, Rishi Sunak regarding COVID-19 support for the self-employed has been announced. The Chancellor said that the scheme will benefit some 95% of people whose main income source is derived from self-employment.

A list of the scheme features as announced, and published, are as follows:

  • Those that qualify will receive a cash grant from HMRC based on 80% of profits, up to £2,500 per month,
  • The initial grant will be for the three months, from 1 March through to the end of May 2020, but could be extended for a longer period. 

To be eligible, the following conditions will be taken into account:

  • Applicants must be self-employed or a member of a trading partnership,
  • Have lost trading profits due to COVID-19,
  • Have filed a tax return for 2018-19. Late filers will have four weeks from 26 March 2020 to do so,
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020-21,
  • Have trading profits of less than £50,000 and more than half of total income from self-employment. This can be with reference to at least one of the following conditions:
    • Your trading profits and total income in 2018-19,
    • Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

There is no need to apply to HMRC as they will contact you if you are eligible. HMRC will use existing data to make this judgement. The initial three-month grant will be paid directly to a nominated bank account in a single lump sum. The grants are expected to be paid out at the beginning of June. The reason for this delay is likely down to three main factors: the 4 weeks additional filing time for late filers, the requirement to set up a complex new system at the same time as the Coronavirus Job Retention Scheme and to reduce the risk of fraud.  It is assumed that those self-employed who have experienced a significant drop in income due to COVID-19 disruption will need to apply for Universal Credits or Business Continuity Loans to tide them over until June. This will be a challenging time for those affected as the demand for help will place significant challenges on the institutions charged with providing this support.

CORONAVIRUS JOB RETENTION SCHEME (CJRS) – update for director shareholders

There has been uncertainty as to the position of director/shareholders claiming under the CJRS as their income is usually taken from their company as a combination of a low salary and dividends. In the news story published following the Chancellor’s statement on 26 March (regarding the Self-employed scheme) is a telling paragraph. It says:
 
Those who pay themselves a salary and dividends through their own company are not covered by the scheme (the Self-employed Scheme) but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.

This infers that directors will only be eligible for the CJRS based on their salary alone, and only if there is a proven PAYE record.

Further details of the CJRS are due to be published imminently and will be added to our newsfeed as soon as they are available.

Other useful commentary – Who wins and who loses in the Self-Employed Income Support scheme?

[DOWNLOAD] COVID-19: Coronavirus Job Retention Scheme and Furlough Letter Template

Below is a possible Draft Furlough letter – this should include guidance from a qualified HR Lawyer and should be prepared in conjunction with your staff contracts.

PLEASE NOTE: THIS IS AN EXAMPLE ONLY AND SHOULD NOT BE RELIED UPON UNTIL YOU HAVE CONFIRMED CONTENTS WITH YOUR LAWYERS AND / OR HR SPECIALISTS

FURLOUGH LETTERS

An employee furlough refers to a temporary leave or modification of normal working hours for a specific amount of time. It’s a leave of absence given to an employee with the promise that they will still have their job once the leave is over.

There are numerous reasons why employers implement a furlough employee policy, such as plant shutdowns, seasonal work, company reorganizations and reduced demand due to COVID-19.

Don’t rush into implementing an employee furlough policy without talking to your lawyer or HR specialist first.

If you decide that putting employees on furlough is the best option for you and your employees, then you need to prepare a notification letter. Your furlough notice letter should contain the following:

  • Address – This is a formal letter, a furlough notice should clearly state the date, employee’s name, and their address.
  • Purpose – State the purpose of the letter. Get straight to the point. Include the employee’s position, department, reason for the furlough, and information about any changes to employee benefits. It is advisable to tell the employee that this action does not reflect dissatisfaction in job performance.
  • Detail – Explain what a furlough is, determine the length of the furlough, and communicate employee benefits during this period to employees.
  • Future communication – Offer a way for the employee to keep in touch. End the letter on a positive note.

EXAMPLE TEXT [NOTE: RUN THIS PAST YOUR LAWYER OR HR SPECIALIST]:

DOWNLOAD WORD DOCUMENT TEMPLATE HERE

or DOWNLOAD Updated Advice from Bridge HR (30/03/20) HERE

[Send to employee’s address or email. Note you should discuss and record employee agreement to be Furloughed before you send this letter. See Knights Plc comments on Furloughing employees.]

Dear [Employee name],

NI NUMBER AND / OR PAYROLL NUMBER

The purpose of this letter is to formally notify you that your position as [INSERT] on the [XXX DEPARTMENT] is being closed temporarily due to the downturn in business as a result of the COVID-19 Pandemic.

Your last official day of work will be [1 March / 1 April INSERT DAY]. Your salary and benefits will continue at their current level [or 80% insert as applicable] during the Furlough period. Please understand this action in no way reflects dissatisfaction with your job performance.

The length of this furlough is [insert future date or unknown currently].

We will provide regular information as the current Pandemic unfolds and when we return to normal working routines.

A Furlough is a short-term paid temporary leave of absence at full / 80% [AS APPLICABLE] of current salary. The furlough period and provisions may be changed or terminated at the sole discretion of the Company, and does not create any employment contract, express or implied.

During the furlough period, your pension and other benefits will continue [IF APPLICABLE].

Thank you for your contributions to the business and if I can help in any way, please contact me.

Yours Sincerely,

[insert signature]

COVID-19: Arrangements for continued provision of services by CGA

We know that this is a time of unprecedented uncertainty for businesses across all sectors and we at CGA will continue to work with all clients to update, advise and provide support during this time.

We are sending out regular updates via email, sign up here.

The team are currently working from home, with Chelle and Claire popping into the office occasionally.  All team members can be reached by email and the office landline is the first point of telephone contact.

The office is closed to visitors. We are contacting clients to rearrange meetings to either an alternative communication option or a revised date – we apologise for any inconvenience that this may cause but are fairly sure you will be 100% supportive of this action.
 
As ever Claire and I will be available on our mobiles, however, it has quickly become apparent that the mobile networks are under some pressure with the numbers of homeworkers having increased, so emails may be the best form of getting in touch.

Business support: new Government website

A full range of business support measures have been made available to UK businesses and employees. With frequent updates and information in different places, it can feel overwhelming at this time. A new government website has launched to help businesses find out how to access the support that has been made available, who is eligible, when the schemes open and how to apply.

Find out about the Government schemes here

The Chancellor has set out a package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19.

This includes a package of measures to support businesses including:

  • a statutory sick pay relief package for SMEs
  • a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
  • small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  • the Coronavirus Business Interruption Loan Scheme to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance
  • the HMRC Time To Pay Scheme

We have therefore taken the guidance as published by the government and added more specific detail to each section and will continue to update each section as more information is provided with regard to how the package of support offered by the Government will be distributed/accessed. 
 
The links below will take you to the relevant pages on our website, which we will keep updated on a regular basis: 

To receive regular government updates as they are issued, sign up here.

COVID-19: Three-month mortgage payment holidays are available for those who are struggling

On Tuesday 17 March, banks agreed with the Chancellor that they will offer ‘forbearance’ (tolerance and help) on mortgages.

This means they all should offer those struggling a three-month ‘holiday’, allowing customers a temporary break from having to make mortgage payments during this time.

While we await final confirmation of the details it should be noted that many banks will help those struggling to repay personal loans.

Here’s what different providers told Martin Lewis they were doing before the Chancellor’s announcement at around 5pm on Tuesday 17 March. He hopes to update this table again today.

Coronavirus: Buy-to-let payment holiday and eviction ban announced

Payment holidays for landlords with buy-to-let mortgages are among a package of measures introduced by the government today in response to the coronavirus pandemic.

The payment holidays, for up to three months, will be offered on the understanding the benefit is to be passed on to the tenant. The move follows extensive lobbying on the issue from both the NLA and RLA.

It has also announced it will also suspend the eviction process, with no new possession proceedings to start during the crisis, with emergency legislation to be taken forward so landlords will not be able to start proceedings to evict tenants for a three-month period.

At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account the tenant’s individual circumstances.

What has the government said?

Making the announcement today Housing Secretary Robert Jenrick MP said: “We are in extraordinary times and renters and landlords alike are worried about paying their rent and mortgage. 

“The last thing anyone needs to worry about at a time like this is losing their home.

“The government is clear – no renter who has lost income to coronavirus will be forced out of their home, nor will any landlord be left with unmanageable debts.

“These changes will protect both renters and landlords ensuring everyone gets the support they need.”

COVID-19: Insurance

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim.

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

GOV.UK Guidance
COVID-19: Insurance

COVID-19: Support for businesses through the Coronavirus Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch next week to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value. Businesses can access the first 6 months of that finance interest free, as government will cover the first 6 months of interest payments.

GOV.UK Guidance
COVID-19: Support for businesses through the Coronavirus Business Interruption Loan Scheme

A bit more info from CGA

At Budget 2020 on Wednesday 11 March, the Chancellor announced a ‘Coronavirus Business Interruption Loan Scheme’, and that it would become available ‘over the coming weeks’.

This has been brought forward, and we now expect the new scheme to become available in week commencing 23 March 2020.

As well as loans, there are many other types of finance supported by the programme, depending on the provider.

It will be provided by the British Business Bank through participating providers, and will offer more attractive terms for both businesses applying for new facilities and lenders, with the aim of supporting the continued provision of finance to UK businesses during the Covid-19 outbreak.

The scheme provides the lender with a government-backed guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. NB – the borrower always remains 100% liable for the debt.

The Government will also cover the first 6 months of interest payments, so businesses will benefit from lower initial repayments. The business remains liable for repayments of the capital. The maximum value of a facility provided under the scheme will be £5 million pounds (the original announcement suggested a maximum value of £1.2 million.)

CBILS SUPPORTS A WIDE RANGE OF BUSINESS FINANCE PRODUCTS, INCLUDING:

  • Term facilities
  • Overdrafts
  • Invoice finance facilities
  • Asset finance facilities

TO BE ELIGIBLE FOR SUPPORT VIA CBILS, THE SMALL BUSINESS MUST:

  • Be UK based, with turnover of no more than £41 million per annum
  • Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support – see below)
  • Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years
  • Have a sound borrowing proposal, but insufficient security to meet the lender’s requirements

Full eligibility criteria will be published shortly

Nevertheless, CBILS is not a grant.  It is a loan, and companies will have increased debt as they (hopefully) emerge the other side.  Directors will need to be comfortable that their businesses can sustain this additional debt over the medium to long term.